Commodity Blog

Wheat futures are crashing to their lowest levels in six weeks on Tuesday, driven by good weather conditions that are helping crops. But the ample supplies are not being scooped by millers because they are likely expecting prices to come down even further.

May wheat futures tumbled $0.095, or 2.23%, to $4.1725 per bushel at 15:29 GMT on Tuesday on the Chicago Board of Trade (CBoT). Wheat prices have plunged nearly 5% in the last week, adding to their year-to-date declines of nearly 20%.

According to the US Department of Agriculture (USDA), 64% of the US winter wheat crop has been rated to be in good-to-excellent condition. The weekly report beats median estimates and is higher than last year’s 33%. It appears that the good weather had aided these crops, particularly in the southern US plains region, which could also explain the better wheat export figures.

Production is anticipated to drive the market in the short-term. Key wheat markets are ramping up their output, including one of the world’s top exporters, Russia. This is dragging down wheat prices. Last week, the USDA warned that prices would be weighed down by climbing inventories and improving US yield prospects.

However, the output momentum may slow down because of weather. This week, rain is expected to pound the Midwest, which could expand river flooding woes and threaten farmers’ operations. Ultimately, spring plantings might experience a delay, affecting both production and inventories.

The early data suggests that US spring wheat planting totaled just 13%, which is immensely below the five-year average of 33% at this time of the year.

In other agricultural commodities, July corn futures slipped $0.0275, or 0.76%, to $3.5875 per pound. July soybean futures fell $0.0725, or 0.84%, to $8.535 per pound. July coffee futures tacked $0.01, or 1.08%, to 93.65 cents per pound. July orange juice futures plummeted $0.02, or 1.88%, to $1.003 a pound.

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